General wiring questions?

I'm converting a mud room into full bathroom. There is one existing outlet in the room which i plan to cover. But can i feed one light fixture from this covered box? If so, the outlet has two 12/2's. Can i connect 14/2 from junction box to bulb fixture or should i just run the same thicker yellow wire? I know this outlet feeds my living room outlets because when i had it unwired, my living room was out and outlet feeding this one was ok. Not sure if i can keep continuity for living room and send power to new light? Also, there is a switch operating two ceiling lights. Can i get power from this switch box for second switch then run new wire to exhaust fan? thx

ps, i ran dedicated 12/2 wire from panel to new gfi.
I'm trying to add exhaust fan with switch and hardwire a light fixture.
I know i can feed everything from dedicated line,
but i was trying to connect to the existing 14/2 wiring in the room.

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The box can not be covered. It must be accessible at all times. That means not having to remove gypsum board, wallpaper, or the cabinet to access. And yes, you can feed the lights in that room off of that one 12/2 20 amp circuit from the gfci, as long as you do not exceed the wattage for the circuit, and feed no living spaces, but can feed another bathroom/washroom. How many lighting fixtures/lights are going in this room, along with fan fixture. As for 14/2, it can only be used for the lighting & fan (15 amp circuit) and can come off of another lighting circuit. Unless you do as above, run off of gfci outlet from 12/2 20 amp circuit.

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The box you wish to "cover" can be covered with a blank plate so it remains accessible. But under no circumstances can you enclose it in the wall or obstruct it with building material. And mixing wire sizes within a circuit is never a good idea.

The Junction box would work like that, as long as you do not exceed fill. As for that 15 amp circuit, use it for lighting/fan, but can't use it for the receptacle circuit. And as stated before, all of the lights can come off of that circuit outside of the room, but you can not exceed the circuit if on #14 romex. That was why when I did my bath, everything was ran with #12 for both lights & receptacles, so that if I ever wanted to add a heated ceiling fan later on, I could pull the wiring for the lighting out of the junction box I have downstairs, and run a 20 amp with #12 for just that lighting circuit.

Do you mean run 12-2 from 12-2 existing outlet (which feeds other outlets outside room) to new switch then to new exhaust fan all with 12-2? If so, can you give more details how to wire since the 15a existing outlet feeds other outlets in use? Then should i run wire from new dedicated 20a gfi to arm mirror light? Trying to get it right before i call the inspector. thx

Would it be easier if i put gfi, mirror light, switch and exhaust all on the new 20a dedicated wire from panel? Or is that too much? thx

The bath has to have a dedicated 20 amp circuit. That circuit can feed the lights, fan and receptacles in that room, but can not feed any other space. Now on the other hand, you CAN feed the lighting in a bath from another lighting circuit. As for wiring, you can not use #14 romex on a 20 amp circuit. You can however run #12 off of a 15 amp circuit, but only if you are feeding the space, but it is not the best choice, since someone may come along and see that there is #12 on a 15 amp breaker and change it out for a 20 amp.